Restaurant Revenue Management in Dutch

Culinary Restaurants

Dr. Sjoerd Gehrels & Wouter van Poppel

Stenden Hotel Management School:Academy of International Hospitality ResearchMaster in International Service Management

Leeuwarden, The Netherlands2014 Global Hospitality, Tourism Marketing &

Management Conference, 4th -6th September 2014

Okinawa, Japan

Background of the research (1)

- Professorship & Research Program: The Study for Hospitality (with a focus on management of Small & Medium Sized Companies)

- Important topic for hotel (small) business: Revenue Management in Culinary Restaurants

- Master students working with researcher to produce publishable research papers

Background of the research (2)Output for Stenden:

• Academy of International Hospitality Research

• Research in Hospitality Management Journal

“Selling the right table to the right customer for the right experience at the right contribution-margin” Van Poppel, 2013

•Researcher (master student) came from F&B director position in Okura Hotel Amsterdam which held two Michelin star culinary restaurants (one and two star).

•He was fascinated by Restaurant Revenue Management and wondered why so little was know about application in the luxury sector.

•Both researchers held very good connections with the important Dutch luxury restaurants.

How is restaurant revenue management (RRM) in Dutch culinary restaurants (DCR) currently managed?

1 What are the success factors for a Dutch culinary restaurant in terms of quality?

2 What is the current awareness and application of RRM in the Netherlands and what is the strategy behind it?

3 Which persons are involved in the application of RRM?4 How are restaurant reservations managed?5 Which market-segments are identified?6 What customer relations management system is used? What information is

retrieved from customers?7 How is the budget-forecasting process organized and which measurements are

applied to measure the performance of a restaurant?8 How are revenues maximized in terms of: food-management; wine-

management and any other possible additional sales?9 How is the lay-out of the restaurant developed in terms of: efficiency;

configuration and table-setting?10 How are sales prices for food & beverage established?

11 How is staff trained in relation to restaurant revenue management?12 What is considered to be the future for RRM? (Technology)13 What technology is applied in Dutch culinary restaurants?14 What are negative aspects in applying restaurant revenue management?

Management

Areas & Issues

Cross

1992 -

2009

Kimes

1998-

2012

(18 art)

Thompson

2003-2013

(8 art)

Yeoman

&

Watson

1999

Other Sources:F

OR

EC

AS

TIN

G

Information -

management/tech

nology

Yes 2008c Yes Yes Ansel & Dyer,

1999

(IT-Strategy)

Knowledge of

customer

Yes Yes Yes Yes

Factors: Weather,

Competition, Risk,

Seasonality

Yes Yes Yes Yes

Budget

measurement

Yes Yes Yes No Ninemeier,

2001

(Menu-eng.)

Historical data Yes Yes Yes Yes

PE

OP

LE

Authority / commit Yes Yes Yes Yes

Meetings/

evaluation

Yes Yes Yes Yes

Yield –manag. Yes 2001 Yes Yes

Team-members Yes Yes Yes 1997

Skills Yes Yes Yes No

Management

Areas & Issues

Cross

1992 -

2009

Kimes1998-

2012 (18

art)

Thompson

2003-2013

(8 art)

Yeoman

&Watson

1999

Other Sources:S

TR

AT

EG

Y &

TA

CT

ICS

Quality - (culinary

restaurants)

No No No No Gehrels, 2004; Surlemont

& Johnson, 2005;

Johnson et al, 2005

Gehrels & Dumont, 2012

Configuration -

restaurant

No 2004 2002, 2003a,

2003b, 2004

2007, 2008

No

Policies /

booking patterns

Yes 2008a, 2004c Yes Yes

Pricing 1992 Yes Yes Yes Shoemaker, 2003

Culture / trust Yes Yes Yes Yes

Options and

tactics

Yes 2004b,

2010a

Yes 1999 Quain et al, 1999; Muller,

1999; Parsa et al, 2005

Angelo et al, 2008

Social Media No Yes 2013 No

Implementation Yes 1999a, 2004a Yes Yes Van Poppel, 2005

Website/online

booking

No 2012 Yes No

Vision & ission 1997, 2009 1998, 1999b

2008b, 2010b

2010 No Lieberman, 2003

Customer Yes 2002, 2003

2007, 2009

Yes Yes Pine & Gilmore, 1999

Hwang & Yoon, 2009

Respondent position Characteristics for including in researchRestaurant owner-chairman culinary assocation

Influential person within restaurant industry / culinary restaurant owner for 37 years /

Owner / managing director atconsulting company

Knowledge financial & performance Dutch hospitality industry / benchmark reports

Restaurant Manager-Sommelier

Experienced in successful culinary restaurants-coaches young talent for contests (service)

Restaurant owner / chef Famous Dutch chef -restaurant owner / publishedbook about all fifty-three European 3*** Michelinrestaurants

F&B Manager-raining Manager Experience in high quality hotelsLecturer HM-Rev Man-ReservMan-FO Manager

Lecturing hospitality management & many years of operational experience in revenue management.

GM / F&B Director-RM International experience in high level food & beverage operations.

Owner online reservations comp. – Culinary events org.

Online reservations market - restaurant table configurations, customer perceptions/habits.

Restaurant Man. -Sommelier Experienced RM in successful culinary restaurantsOwner technology systems company

Creator, developer of software solutions for hotel and restaurants. International experience.

Lecturer HM – Author –Consultant

Experienced in lecturing strategic and innovation management. Extensive international network

Results and Conclusions

1. Culinary restaurants differ in certain aspects from other restaurants.

2. Dutch culinary restaurants (DCR) do not consciously practice revenue management + have no strategy for it.

3. If DCR could achieve 2-5 percent more revenue associated with application of revenue management, overall revenues could increase with € 8 million annually almost all adding to the bottom-line.

4. Some RM tactics are applied unconsciously, specifically those relating to customer relationship management.

5. Two key strategies for RM: demand-based pricing and duration management are not applied in Dutch culinary restaurants (it is feared that customers might possibly shy away if they are applied).

Recommendations

• New and extended definition for restaurant revenue management in DCR.

• A conceptual framework for restaurant revenue management that visualizes the steps to be taken by culinary restaurants to realize the benefits of applying restaurant revenue management.